SHORT TERM: pullback continues, DOW -119
Overnight Asian markets gained 0.1%. Europe opened higher but lost 0.1%. US index futures were higher overnight, and at 8:30 weekly Jobless claims were reported lower: 255k v 281k. The market opened two points above yesterday’s SPX 2114 close, dipped to 2111 by 10am, then tried to rally. At 10am Leading indicators were reported higher: +0.6% v +0.7%. By 10:30 the market hit its high of the day at SPX 2117. Then it started to decline. Around 11:30 it broke through support at SPX 2110, and declined to the next support at 2102 by 12:30. Then after a bounce to SPX 2108 by 2pm it headed lower again. In the last hour of trading the SPX hit 2099, then bounced to close at 2102.
For the day the SPX/DOW were -0.60%, and the NDX/NAZ were -0.40%. Bonds gained 11 ticks, Crude lost 60 cents, Gold slipped $5, and the USD was lower. Medium term support remains at the 2085 and 2070 pivots, with resistance at the 2131 and 2198 pivots. Tomorrow: New home sales at 10am.
The market opened slightly higher today, pulled back, then hit SPX 2117. After that there was a steady decline to SPX 2102, before a bounce, and then an even lower low. We had counted three waves up from the downtrend low at SPX 2045: 2074-2051-2133. And was expecting this pullback to be the fourth wave before heading higher. Over the last two days the SPX hit 2110, the first support, then 2102, the second support, and now made an even lower low. This is more than was expected for a fourth wave pullback. With the DOW leading the market lower, one has to consider that this uptrend may just be more corrective activity in the multi-month corrective activity see have observed all year. In order for the impulse wave to remain intact the market needs to find some good support soon, and then rally a higher high. Short term support is now at the 2085 and 2070 pivots, with resistance at the 2131 and 2198 pivots. Short term momentum continues to display a positive divergence during the decline. Best to your trading!
MEDIUM TERM: uptrend
LONG TERM: bull market